BP and Adnoc bid to acquire half of Israel’s NewMed, taking it private: Global energy giant BP and the Abu Dhabi National Oil Company (Adnoc) have submitted a preliminary, non-binding offer to acquire 50% of Israel’s NewMed Energy in a transaction worth some USD 2 bn, NewMed said in a disclosure (pdf) to the Tel Aviv stock exchange. The acquisition would mark the two firms’ first foray into Israel’s energy sector as they angle for a piece of the growing Eastern Mediterranean gas industry. Closing the transaction could help them become key suppliers of gas to Europe.

The offer: BP and Adnoc would buy the full 45% of NewMed that is in free-float, as well as 5% of the 55% stake currently held by Delek Group, making NewMed a 50-50 partnership between the consortium and Delek. BP and Adnoc are offering ILS 12.05 per share, valuing NewMed at some ILS 14.1 bn — or nearly USD 4 bn — in total. The offer comes at a 72% premium to NewMed’s price before news broke of the transaction.

Market reax: NewMed shares soared on the news, closing 37% higher at ILS 9.98yesterday. BP shares rose 2.3% in London.

All three companies play a role in our energy infrastructure:

  • NewMedowns 45% of the Leviathan gas field that feeds into Egypt’s Idku and Damietta LNG processing plants, and holds a 30% stake in Cyprus’ Aphrodite field, which is set to be connected to Egypt’s LNG plants by 2025.
  • BP currently produces more than 60% of Egypt’s total gas supply, last year producing 1.3 bn cubic feet per day. The company is also investing to expand its upstream operations and last year was awarded three new exploration blocks in the Mediterranean.
  • Adnocearlier this year entered the downstream energy market after its distribution arm acquired a 50% stake in fuel retailer TotalEnergies Egypt.

Meaning this could be good news for our energy hub ambitions: “This partnership is about the east Mediterranean — Israel, Cyprus, and Egypt,” Bloomberg quotes NewMed CEO Yossi Abu as saying in an interview. Abu told Reuters the transaction is “a sign of confidence in the East Med becoming a major supplier of gas to Europe.”

What energy hub ambitions? Alongside a deep push into renewables and hydrogen, Egypt is trying to maximize its exports of natural gas as the EU looks for new energy suppliers to fill the gap left by the loss of Russian fossil fuels, with the Oil Ministry targeting a 40% increase in LNG exports by 2025, the bulk of which will be sent to Europe. The government last year inked an agreement with Israel and the EU to help boost exports.

We’re already expecting more gas from NewMed: Prior to the BP-Adnoc offer, NewMed said it was planning to spend USD 100 mn to up production from Leviathan by 75%, some of which will be earmarked for our LNG plants.

With one caveat: NewMed has plans to build a floating LNG terminal that would allow it to export LNG directly to the EU, bypassing our processing plants. BP and Adnoc “have technical and operational experience in floating LNG facilities and also marketing LNG,” Abu told Bloomberg.

More to come? The JV “will be focused on gas development in international areas of mutual interest including the East Mediterranean,” the companies said in a statement. “The two companies intend to explore a range of mechanisms for the formation and potential further expansion of their new partnership.”

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